Correlation Between HE Equipment and Inflection Point

Can any of the company-specific risk be diversified away by investing in both HE Equipment and Inflection Point at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HE Equipment and Inflection Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HE Equipment Services and Inflection Point Acquisition, you can compare the effects of market volatilities on HE Equipment and Inflection Point and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HE Equipment with a short position of Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Inflection Point.

Diversification Opportunities for HE Equipment and Inflection Point

-0.36

Correlation Coefficient

HE Equipment  Inflection Point

Very good diversification

The 3 months correlation between HEES and Inflection is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq and HE Equipment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HE Equipment Services are associated (or correlated) with Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of HE Equipment i.e., HE Equipment and Inflection Point go up and down completely randomly.

Pair Corralation between HE Equipment and Inflection Point

Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Inflection Point. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 2.36 times less risky than Inflection Point. The stock trades about -0.62 of its potential returns per unit of risk. The Inflection Point Acquisition is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,350  in Inflection Point Acquisition on October 12, 2024 and sell it today you would lose (10.00) from holding Inflection Point Acquisition or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HE Equipment Services  vs.  Inflection Point Acquisition

HE Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HE Equipment Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Inflection Point Acq

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HE Equipment and Inflection Point

The main advantage of trading using opposite HE Equipment and Inflection Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Inflection Point can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inflection Point will offset losses from the drop in Inflection Point's long position.

The idea behind HE Equipment Services and Inflection Point Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.